Individual Investors ...the love in equities plummeted in the most recent period to 35.1% - down almost 10 points.

The chase by Frances Horodelski:

Yo! A fast growing app that just received a million-dollar infusion and lit up Twitter yesterday as everyone was saying “Yo” because that’s all it does. Another thing I don’t understand?

Looking for a melt-up? David Rosenberg notes that at previous market highs, mutual and ETF fund flows on a five-year average basis were running at $20 billion in 2000 and $15 billion in 2007. Today, flows are closer to $8 billion underscoring the lack of individual investor involvement in this bull market and as they return, a melt-up is possible. On the other hand, according to Walter Murphy, a former Merrill Lynch technician, the ratio of household financial assets (read: investments) to total assets is 70.4%. Previous secular peaks (1960s and 2000s) the ratio was 70.3% and 70%, respectively. Mr. Murphy suggests that in his view, investors are already “all-in”. And while new highs are likely in the coming months it might be a grind rather than a melt-up. Meanwhile, the American Association of Individual Investors are seeing thelove in equities as bullishness plummeted in the most recent period to 35.1% - down almost 10 points.

Toronto has finally joined the “all-time high” camp surpassing the June 18, 2008 high by 36 points to close yesterday at 15,109.20 (although still below its intra-day high of 15,154.77 achieved also in June of 2008). The winners since 2008: Valeant, Catamaran, Alimentation Couche-Tard and Linamar. Losers: Nortel, YPG Financing, Niko Resources and Mercator Resources and BlackBerry. And despite this year’s 20% return in the energy sector, patient investors are still waiting to achieve the June 2008 levels – energy is still down 16% from six years ago. And remember, for those who invested in an index ETF on June 18, 2008 are now – flat on six years (excluding dividends).

Speaking of BlackBerry, it is the company’s annual general meeting and fourth quarterly report day. Amber Kanwar is in Waterloo covering the story for BNN and will interview John Chen. The results show a beat on the bottom line (a smaller loss than expected), revenues slightly above expectations, a cash build although net of a tax refund and real estate proceeds, there was a cash burn of $255 million in the quarter but better than the burn of $784 million in the last quarter. Stock is up 10% in the pre-market.

What do courgettes and peas have in common with gold? According to the World Council in its report released today - confusion! Courgettes (zucchini) and peas are fruits but are used as vegetables. Gold suffers from a “similar kind of category confusion” – it features in commodity indices but responds to different economic factors, it is less volatile and has a lower correlation to the business cycle. The council believes it is the ideal “alternative investment”.

Calendar watch including the weekly jobless claims, U.S. Philadelphia Fed Index, earnings from Oracle, a couple of major consumer conferences (Deutsche Bank in Paris and Jefferies in Nantucket), and a lot of annual meetings including Quebecor, Martinrea, H&R Reit, and Great Canadian Gaming. We’ll continues to watch VRX/AGN as well asGE/Alstom/Siemens/Mitsubishi.

Finally, the world is a happy place today. Mrs. Yellen did not mis-step yesterday. Markets responded to the lower for longer implications of the “dots” despite a slight shift upwards in expectations for 2015 and 2016. Equity market valuations are within “normal” ranges according to the chair of the FOMC. We’re getting the follow through from new highs on the S&P 500 yesterday as pretty much every equity market around the world is in the green (Italy +1%) with the exception of Chinese equities which have an tendency to get their own way. All the major currencies are higher and most bond markets have prices up, yields down.

Enjoy.

Market Outlook

Market Outlook:

The market bears are looking at thinning values and are expecting another 2008-like outcome. The VIX Index is bumping along its very long term average lows, which did lead to the market rout of 2008-09, however, we still do not see the sort of excesses that started that whole bear market off. There are expensive pockets here and there (the recent collapse of the social media stocks), but not the kind of overall excess that necessarily leads to a wholesale rout of stock prices and a major economic setback. While there is no doubt that the excessive monetary expansion does constitute an “excess” from which any serious pulling back will be very, very painful, as far as we can see, the Chair of the Fed, Janet Yellen, has no intention of allowing such an event to occur on her watch and in an election year.

We pay a good deal of attention to what Stephen Poloz says about the outlook, and does in practice. His actions remain bullish for the asset markets and we continue to look for opportunities to take advantage of the central bank actions.

www.bnn.ca